- What is the S & P 500?
- What is the Dow Jones Industrial Average?
- What is an IPO and should I participate in one?
- What is the difference between a Registered Investment Advisor and a Stock Broker?
- Does it matter if you buy a stock before or after it splits?
- Why do brokerage charges vary so much?
- What is asset allocation all about?
What is the S & P 500?
The S & P 500 is an index that consists of the stock of 500 companies that reflect the broad base of the American economy. The list of companies is made up primarily of industrial firms (approximately 80%) and the remainder covers financial, transportation and utility stocks. The index is widely regarded as the performance benchmark of American industry.
Top
What is the Dow Jones Industrial Average?
Commonly known as the "Dow", it is the oldest and most widely known measure of the American securities market. The Dow is made up of the stock of thirty large industrial companies. The list of stocks that comprise the Dow changes occasionally to reflect changes in industrial and market conditions.
Top
What is an IPO and should I participate in one?
An IPO (Initial Public Offering) is the first public sale of all or a portion of the ownership interest of a company to the public and subsequently making the stock available for open trading. An IPO is usually engaged after several rounds of private financing.
Due to the unpredictable nature of the securities markets in general and the IPO market in particular, it would be prudent to consider investing in an IPO only with funds that would not be needed for a planned purpose and with an expectation of significant volatility.
Top
What is the difference between a Registered Investment Advisor and a Stock Broker?
A Broker (stock or bond) is a Registered Representative who is compensated for transactions that are carried out on behalf of his/her client. The Registered Investment Advisor on the other hand is one who advises the client regarding investments and is compensated based upon the assets under management. The RIA is, in effect, retained by the client on a longer term basis where as the Broker is retained per the transaction.
Top
Does it matter if you buy a stock before or after it splits?
No. One share of stock valued at $100 is worth the same as two shares of stock valued at $50. Both are still worth $100. It is also a myth that all stocks go up after they split. Just as many stocks do nothing or go down as go up after a stock split.
Top
Why do brokerage charges vary so much?
Transaction charges can indeed vary widely
and are driven by the business model employed by each company. It costs the same for a discount broker to conduct a transaction as it does a full service firm. There are charges that apply to all transactions. There are Securities and Exchange Commission (SEC) fees, Exchange fees, and self-regulatory organization (SROs) fees but those are standard amounts or specified percentages of the value of the trade. With the exception of a legal limit on the percentage that can be charged on loaded (cost to purchase) mutual funds, the cost of a transaction is at the discretion of the individual firm. Usually securities firms that are considered to be full service firms will charge higher fees than those firms that exclusively offer transactions.
Top
What is asset allocation all about?
Asset allocation is an industry buzz word but one that deserves to be considered. As the name implies, various methods of allocating ones assets over various investment categories for the purpose of achieving diversification of ones portfolio. Diversification of assets is important due to the unpredictable nature of the securities markets. Often when one asset category is performing well, it may offset the potential or actual underperformance of another category. It is not a guarantee against loss, but a means of reducing one's exposure.
Top
Still have a question not answered here? Feel free to contact us at AdvisorRegistry.com and
ask.
|
